Big I CT’s Lounsbury Calls For ‘TPLF’ Regulation
Connecticut lawmakers should require litigants to disclose in court when they are using third-party litigation funding (TPLF) arrangements, Big I Connecticut argued in a recent newspaper editorial. Association President Lisa Lounsbury called for action in a column published in the July 28, 2026 edition of the New Haven Register.
Under a TPLF arrangement, a person or company who is not one of the parties to the lawsuit provides some or all of its funding. If their side wins a judgment, they collect a portion of the awarded damages. If it does not, they collect nothing.
As these arrangements are largely unregulated, funders can set their fees as high as they want. There is also no requirement that a party suing someone else disclose in court that a third party is paying the cost of the legal action.
“In many states, including Connecticut,” Lounsbury wrote, “consumers who turn to third-party litigation funding have little to no protection from abusive funders. The result is a system where plaintiffs can be harmed further, lawsuits multiply, and the public pays the price through increased insurance premiums due to higher legal costs and inflated awards.”
Lounsbury noted that other states, including New York, have begun to regulate these arrangements. These states are enacting caps on funders’ charges and requiring that funders register with state authorities. North Carolina banned TPLF arrangements earlier this year.
In contrast, she reported that a proposal in the Connecticut legislature to simply study the issue was defeated in committee during the legislative session that ended last spring. This enabled TPLF funders to continue operating in the state without transparency.
“Congress, Connecticut, and other states can and should tackle the growing use of TPLF agreements before they do more damage to the legal system and add more cost to the insurance industry,” Lounsbury argued, pointing to a study estimating $50 billion or more in added insurance costs over the next five years. “Lawmakers need to require registration of funders, set limits on fees and recoveries, and demand full disclosure in court.”
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